Cisco’s Slowdown Appears Steeper Than Expected

Cisco signaled in August that it was headed for tougher times. The numbers it issued Wednesday fulfill that projection, and then some.

The Silicon Valley networking giant had projected that revenues in the quarter ended in October would rise 3% to 5%, a slowdown compared to the 6% reported in the fourth period.

Instead, Cisco said revenue rose just 1.8% to $12.1 billion, while net income declined 4.6% to $2 billion.

Cisco didn’t put much detail out initially on the reasons behind the results advance of a conference call that starts at 4:30 ET, which is likely to include its projection for the current quarter. The company did say its board authorized up to $15 billion in additional stock repurchases; its board had previously authorized up to $82 billion in buybacks.

Besides ongoing problems, such as a negative reaction to Cisco in China recently, the company has a large business in sales to the federal government that could have been impacted by the recent shutdown.

“I certainly suspect that federal was a component,” said Erik Suppiger, analyst at JMP Securities.

Update: During its conference call, citing order declines in emerging markets and among service providers, Cisco forecast revenue would decline an additional 8% to 10%. Its shares, initially off about 3% in after-hours trading, spiraled down nearly 10% to $21.65 following the guidance.